Project Management & Execution Flashcards

Which body is the self-regulatory organization for the U.S. futures industry?

Answer: NFA

The National Futures Association is the industry-wide self-regulatory organization overseen by the CFTC.

The purpose of speculative position limits is to:

Answer: Reduce the risk of market manipulation and excessive concentration

Position limits curb excessive speculation and potential manipulation.

Before an associated person can exercise discretion over a customer's futures account, which is required?

Answer: Written authorization from the customer

Discretionary trading requires the customer's written power of attorney and firm acceptance.

Which document must be furnished to a new retail futures customer before the account is opened?

Answer: A risk disclosure statement

A risk disclosure document must be delivered and acknowledged before opening a futures account.

A trader buys and sells the same contract with no change in beneficial ownership to create the appearance of activity. This is a:

Answer: Wash trade, which is prohibited

Wash sales are illegal because they create misleading volume and prices.

Futures order tickets must include which of the following?

Answer: Account identifier, order details, and time of entry

Order records need account identification, order terms, and a time stamp.

Under CFTC recordkeeping rules, most required records must be kept for at least:

Answer: Five years

CFTC Rule 1.31 generally requires a five-year retention period.